U.K. to Sell $7 Billion Lloyds Bank Stake to Money Managers

A logo sits on a sign outside a Lloyds Bank branch, a unit of Lloyds Banking Group Plc, in London. Photographer: Chris Ratcliffe/Bloomberg

March 26 (Bloomberg) -- The U.K. government is selling a
4.23 billion-pound ($7 billion) stake in Lloyds Banking Group
Plc, its second disposal since rescuing the lender in the
financial crisis.

The government is selling a 7.5 percent stake to money
managers to cut its holding to about 25 percent, U.K. Financial
Investments Ltd., which manages the government’s stake in the
lender, said in a statement. The 5.35 billion shares will be
sold at a price set by an accelerated bookbuilding, UKFI said.

Orders below 75.5p a share are likely to miss out,
according to two people familiar with the deal. Demand was
expressed yesterday for all shares offered, terms show.

The sale may be followed in coming months by the first
offering of Lloyds shares to individual investors. Lloyds Chief
Executive Officer Antonio Horta-Osorio said last month he will
ask regulators in the second half for permission to restart
dividend payments, the lender’s first since 2008.

The sale “should be good for the stock,” said Chirantan
Barua, an analyst at Sanford C. Bernstein Ltd. in London who has
an outperform rating on Lloyds. “The fact that they have
retained the 25 percent clearly shows that they want to do a
retail offering this year as well.”

The U.K. last sold a 3.2 billion-pound holding, about 6
percent of Britain’s biggest mortgage lender, to money managers
in September. The shares were then sold for 75 pence each.

General Election

Lloyds has since climbed 2.3 percent, making the stock the
best-performing of Britain’s five biggest banks. The lender
advanced 0.8 percent to 79.11 pence in London yesterday, above
the 61 pence at which the government says it will break even
after providing a 20 billion-pound rescue in 2008.

The Treasury said in December it plans to give taxpayers
the opportunity to purchase Lloyds shares “when the time is
right” after a sale to money managers.

Chancellor of the Exchequer George Osborne, constrained by
the biggest austerity program since World War II, could use the
proceeds from the offerings to fund tax cuts or more spending
before the next general election, due in 2015.

Osborne said last year that Royal Bank of Scotland Group
Plc, which received a 45.5 billion-pound bailout during the
financial crisis, is still burdened by too many poor assets for
the government to start reducing its 80 percent stake.

U.K. Financial Investments told Osborne “it would be
appropriate to sell another part of the government’s
shareholding,” the Treasury said in a statement yesterday.